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April 16, 2012

Top Portfolio Products: BlackRock to Launch Bond-Trading Platform

Plus, United States Commodity Funds introduces agriculture fund, while the Market Vectors Fallen Angel High Yield Bond ETF is rolled out

New products introduced over the last week include plans by BlackRock to launch a platform for bond trading that will bypass Wall Street, an agricultural fund from United States Commodity Funds and a fallen angel-bond ETF from Market Vectors.

In addition, a global high-income fund has been rolled out by Saturna, and Grendel Online added ASI’s portfolio-rebalancing solution to its CRM suite.

Here are the latest developments of interest to advisors:

1) BlackRock to Launch Bond-Trading Platform

BlackRock will launch a bond-trading platform this year that will allow it and other money managers to trade bonds directly with one another and leave Wall Street out of the loop.

The new platform is to be run by BlackRock Solutions and will provide a means to trade corporate bonds and mortgage securities, as well as other assets, for 46 clients, including sovereign-wealth funds, insurance companies and other money managers.

The platform, dubbed the Aladdin Trading Network, will match buyers and sellers of the same securities, in a "crossing trades" process, and the company plans to charge far smaller commissions than is customary for Wall Street trading. A test trade has already been completed on Aladdin and launch is expected by the end of the year, according to BlackRock.

2) Commodity Funds Introduces U.S. Agriculture Fund

United States Commodity Funds on Friday introduced the United States Agriculture Fund (USAG), which tracks the SummerHaven Dynamic Agriculture Index (SDAI). USAG’s objective is for the daily changes in percentage terms of its units’ net asset value to reflect the daily changes in percentage terms of the SDAI, less USAG’s expenses.

USAG’s target is a portfolio of agriculture-futures contracts designed to be an investment benchmark for agriculture as an asset class. The SDAI is composed of agriculture-futures contracts traded on major exchanges in the United States and Canada, and it attempts to maximize backwardation and minimize contango while using contracts in the liquid portions of the futures curve.

3) Market Vectors Rolls Out Fallen-Angel Bond ETF

Market Vectors ETF Trust announced Wednesday that trading has begun on Market Vectors Fallen Angel High Yield Bond ETF (ANGL), a fund designed to focus on the U.S. dollar-denominated “fallen angels” segment of the corporate high-yield bond market, which currently accounts for roughly 15% of the dollar-denominated high-yield bond universe.

ANGL seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Bank of Americal Merrill Lynch U.S. Fallen Angel High Yield Index (H0FA), which is comprised of below-investment-grade corporate bonds denominated in U.S. dollars that were rated investment grade at time of issuance.

Bonds may have been issued by either U.S. or non-U.S. issuers, but qualifying securities must be issued in U.S. dollars in the U.S. domestic market for inclusion in the index. ANGL has a gross expense ratio of 0.52% and a net expense ratio of 0.40%, which is capped at least until Sept. 1, 2013.

SGHIX permits investments in U.S. and foreign bonds, as well as in common and preferred stocks. Its secondary objective of capital preservation integrates risk-exposure constraints into its fundamental strategy.

SGHIX is co-managed by Bryce Fegley and John Scott.

Its global investment universe includes the 1,200 largest dividend-paying common stocks, targeting yields above 4%; global high-yield bonds, including sovereigns and U.S. high-yield corporates, and, to a lesser extent, preferred stocks.

It may hold no more than 50% of its assets in common stocks, no more than 50% in securities of U.S. issuers, no more than 50% in bonds rated A-minus or higher, and no more than 33% in securities of emerging market issuers.

In addition, the fund is not permitted to engage in hedges, credit default swaps, or other transactions that involve leverage or borrowing.

5) Grendel Online to Offer ASI Portfolio-Rebalancing Solution

Advisor Software Inc. said last Monday that it struck an agreement with Grendel Online that allows Grendel’s advisor clients to add the ASI portfolio-rebalancing solution to their Grendel CRM suite.

The portfolio-rebalancing solution was previously only available to enterprise-level clients, and the partnership with Grendel Online now allows individual advisors who use Grendel’s CRM platform to easily integrate portfolio rebalancing into their practices.

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